Top 5 Uncertainties in the Tax Code Harm Small Businesses

NFIB looks at five ways Congress should fix the tax code

One of the biggest obstacles to small business growth is uncertainty in the tax code, says Kate Bonner, host of NFIB's Top 5.

"Small business owners are planners. They think ahead," Bonner says. "The problem is, politicians don't."

The Top 5 tax uncertainties in the tax code affecting small business are:

  1. Individual tax rate. Three-quarters of all small businesses pay taxes at the individual rate. Unless Congress acts this year to make tax cuts permanent, these business owners could see their tax rates rise to 39.5%.
  2. Estate tax. Without Congressional action in 2012, the current 35% rate will rise to 55%, and the $5 million exemption will be reduced to $1 million.
  3. Small business expensing. Wildly fluctuating limits - from a low of $25,000 and a high of $500,00 - make planning for expenditures entirely too difficult. Congress should increase the current $125,000 limit and keep the expanded coverage options for real property.
  4. Unemployment taxes. Unless Congress gives states more flexibility, such as stricter eligibility requirements or fewer weeks of benefits, small businesses could face devastating tax increases.
  5. The alternative minimum tax. Because it hasn't been indexed to inflation, more and more small business owners are being hit with the AMT.

Learn more about what NFIB is doing to help small business owners when it comes to taxes at nfib.com/taxes.

On NFIB's Top 5 web series, Kate Bonner puts government policy under the microscope to show its effects on small business, the engine that drives the U.S. economy.

About NFIB
NFIB is the nation’s leading small business association, with offices in Washington, D.C., and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. NFIB’s powerful network of grassroots activists send their views directly to state and federal lawmakers through a unique member-only ballot, thus playing a critical role in supporting America’s free enterprise system. NFIB’s mission is to promote and protect the right of members to own, operate and grow their businesses. For more information visit NFIB online.